Today Sony (NYSE:SNE) released its 1Q fiscal year 2018 results for the period April – June and it posted overall positive results. Sony is fresh off a very strong fiscal 2017 year that saw the company rake in record levels of operating profit. The quarter also coincides with the first quarter under new CEO Kenichiro Yoshida.

The first quarter of the fiscal year 2018 is greatly improved from the year-ago quarter, almost entirely from the powerful Gaming division. PlayStation continues to surge in both hardware and software sales and we will dive into the numbers below.

Game & Network Services (PlayStation) – Strong growth (+36%) on the back of God of War and other software sales

3.2 million PS4’s sold in the quarter, total 82 million units installed worldwide

40 million PS4 games sold in the quarter

We can announce that the grand total of PS4’s sold to date to is now over 82 million units and will soon surpass the PlayStation 3 in installed units worldwide. This means Sony is able to enjoy success as the world’s #1 console video game platform. The group saw sales that spiked 36% despite the system nearing its 5th year of age. Sony executives cited God of War as driving profits for the group and say that first-party exclusive titles will continue to drive Game and Network group numbers for the foreseeable future.

Game and Network Services booked over $4 billion in revenue for the first quarter of the fiscal year 2018.

The “network services” portion of the group would be PlayStation Plus, a premium paid-for subscription service that more and more PS owners are signing up for. Digital sales and subscription revenue were cited as key drivers for the gaming divisions performance.

The forecast for the division is slightly up as Sony has revised system hardware sale forecasts based on recent surges in demand. Its clear PlayStation will be the engine powering Sony to a sustainable and profitable future for the time being.

Sony Music

2018 Q1 revenue of $1.66 billion up from $1.54 billion a year ago, an 8% increase

Fate/Grand Order is a mobile, free-to-play app, available on Android and iOS and accounts for a large chunk Sony Music’s “visual media and platform” group revenue. The application enjoyed over $400 million in revenue booked for the group.

During the quarter Sony Music also bought out Nile Acquisition LLC, which owns 40% of EMI. EMI Music Publishing is a music publisher, which Michael Jackson’s estate owned until Sony bought it the reamaining stake. EMI is said to be worth almost $5 billion and now with this new subsidiary, Sony will be one of the largest music publishers in the world with a catalog of over 4 million songs! Its clear Sony views music streaming as a key revenue driver.

Sony Hardware – Mobile Devices, Home Entertainment, and Imaging

Sony Mobile (phone) sales down 27% y-o-y, booked $1.21 billion

2018 Q1 revenue of $17.9 billion up from $70.39 billion a year ago, a 5% increase

A growing thorn in Sony’s side is its mobile handset business which counts its revenue, primarily from its Xperia line of handsets under the Mobile Communications segment. Sales of $1.21 billion were down 27% from the previous year and the group posted a loss of $99 million. Sony has lowered revenue forecasts for Mobile units as it sees further reductions in demand for its Xperia mobile devices.

The mobile communications group guided to a further 12% drop in sales for fiscal 2018 and a projected loss of $138 million. The group does see some light at the end of the tunnel – 5G wireless technology.

I would now like to say a few words about the importance of 5G Wireless Technology in the context of our strategy for smartphone business going forward… This is a technology which we view as having immense potential since it connect all portable devices to the cloud.

In order to fully utilize this leading edge technology, we need to retain in-house fundamental research capability – and capability to create related applications. By continuing to work on 5G smartphone business, we are aiming to develop 5G technology as a competency that can be used across the entire Sony Group.

The Tokyo-based firm wants to justify a continued investment into R&D in mobile due to 5G’s potential for the entire company.

Sony Bravia 4k TV

Sony groups most of its “branded hardware” into its “Home Entertainment and Sound” division. Q1 FY2018 sales increased 18% Y-o-Y and the group accredited its performance to strong demand for its Bravia 4K televisions and general strong product appeal, as well as emerging sales of Bravia OLED televisions.

The imaging group continues to help Sony’s bottom line with a solid quarter at 6% growth year over year and operating income of $230 million for the quarter. The company’s mirrorless series of image sensors as well as its strong interchangeable lens lineup were cited as key drivers.

Wrapping up

Sony now has several months under its new CEO, Kenichiro Yoshida. Yoshida has made no doubts about it, he sees Sony’s strength in its imaging products as well as its proven gaming division and has laid a three-year plan focused on executing based on these strengths.

The clock seems to be ticking on Sony’s mobile division. Competition seems to only be increasing with more and more entrants like Huawei and Oppo. Bravia handsets have lagged in design with large bezels and sky-high prices, and Sony can’t seem to leverage its excellent camera modules, that it supplies to almost everyone, to bring out a phone that is a clear winner when it comes to taking pictures. Mr. Yoshida will be eying this division very carefully in the coming years.

The firm has pivoted nicely to digital assets and consumer entertainment revenue streams. PlayStation continues to grow digital revenue as its installed based grows ever larger and Sony Music is growing at a rapid pace thanks to wise investments in Spotify (pre-IPO) and mobile app revenue.

Investors were pleased with this morning’s financial results, shares of Sony (NYSE:SNE rose over 3% on the day.